Yahoo: "We were not aware of nor would we condone this reported activity."

It is alleged that the operation known as Optic Nerve operated between 2008 and 2010 with the help of the US National Security Agency. Images obtained and stored apparently included those of people who were not suspected of any wrongdoing, as well as some sexually explicit images.

"Unfortunately… it would appear that a surprising number of people use webcam conversations to show intimate parts of their body to the other person," one of the documents leaked by whistleblower Edward Snowden read.

"Also, the fact that the Yahoo software allows more than one person to view a webcam stream without necessarily sending a reciprocal stream means that it appears sometimes to be used for broadcasting pornography."

Yahoo has insisted it was not aware of the "unacceptable" activity and called it "a whole new level of violation".

"We were not aware of nor would we condone this reported activity," the company said in a statement.

"This report, if true, represents a whole new level of violation of our users' privacy that is completely unacceptable and we strongly call on the world's governments to reform surveillance law consistent with the principles we outlined in December."

It added: "We are committed to preserving our users' trust and security and continue our efforts to expand encryption across all of our services."

GCHQ has not commented on the specific case but said its actions are in accordance with the law in a statement.

"All of GCHQ's work is carried out in accordance with a strict legal and policy framework which ensures that our activities are authorised, necessary and proportionate, and that there is rigorous oversight, including from the secretary of state, the interception and intelligence services commissioners and the Parliamentary Intelligence and Security Committee. All our operational processes rigorously support this position."